- 15 min read
- DEBBIE WILSON
Introduction
Let’s talk about the importance of understanding your sweet spot before you select a CLM platform. You absolutely MUST take the time to determine the functionality that best aligns with your desired business outcomes before investing in a solution. In tandem with stakeholder engagement, this is one of the most critical considerations for finding and implementing the best contract management software for your organization.
If you’re like most procurement leaders, you’re under pressure to deliver more value and greater efficiency with less resources.
So why don’t you just deploy that CLM module in the suite your company already uses? You know, just check that CLM solution box by deploying the contracts module of your ERP, your procure-to-pay solution, your source-to-settle apps or your CRM. You could even pop in a low-end tool that your friend once recommended. Low effort always delivers outstanding results, right?
Well, no. If you go this route, you’ll likely find yourself under even more pressure to explain why your team is navigating a cumbersome new solution that’s failing to deliver on value or efficiency. The most common complaints I hear about going with suitemates are: “Search is terrible—yes, the contracts are there, but I can’t find them”; “Reporting isn’t very good”; and “The UX is so dated and clunky my team won’t use it.”
By taking the easy route and just checking the box, you’re missing out on the wide range of opportunities that a best-in-class, AI-driven CLM can deliver.
Taking Stock of Your Challenges
Finding the right CLM begins by taking the time to understand your unique business challenges. These challenges are opportunities that AI-driven enterprise contract management software can turn into a competitive advantage. After all, the greatest gains are made in areas where your organization is uniquely positioned to realize benefits—so determine the problems you need to solve to boost your advantage.
Here are the most common problems and complaints I’ve heard over the years that a good CLM solution can transform into opportunities:
1. How do I drive contract rationalization and awareness during negotiations? I knocked myself out negotiating net 90 payment terms when another division had already gotten that concession.
Contract silos are a constant problem in large, distributed organizations, or any company in which communication is challenged. The right CLM knocks down siloes by connecting teams and creating a single source of truth with intelligent search functionality that captures structured metadata and ensures that confidential information can only be accessed by authorized individuals. The cost savings can be substantial for a large organization.
2. How can I stay on top of all the commitments contained in large, complex contracts? My company has complex contracts with just a few large vendors for IT outsourcing, product development, site maintenance and support. I really need a tool that puts commitments—deadlines and charges—at my fingertips so I know when things are due and before things go awry.
This is often the case for oil and gas companies, as well as pharmaceutical and life science companies—but the reality is that complex contracts impact every industry. For this you need robust commitment tracking, including the ability to calculate fees and compare them to contracted amounts. In addition, good reporting tools will prove critical. The right CLM platform will address all of these issues, allowing you to cut costs in the process.
3. How can I ensure that our contracts remain in compliance with constantly changing regulatory requirements? With the rapidly evolving regulatory environment we’re in, we regularly need to revise vendor contracts with new terms. This needs to happen efficiently and effectively.
Managing in a high-change regulatory environment requires a robust CLM that facilitates vendor outreach, provides contract status alerts and tracks contract version controlling. In addition to effective regulatory compliance, you’ll realize all the benefits of greater team efficiency.
4. How can I manage contracting processes that involve multiple stakeholders from various departments? We try to involve IT, finance, engineering, facilities and whoever else we need to when we raise a new contract. It’s hard to keep straight who’s reviewing and which agreements are in play—much less ensure that everyone has enough time to do their part.
A good match for this challenge is a CLM with robust workflow features such as parallel path processing, and great real-time approval process reporting. A system for this use case should also have standard lead times for how long to allow each step. It guarantees that your colleagues in IT, finance, engineering, etc., will have the chance to contribute.
How to Determine which CLM Addresses Your Unique Challenges?
First, invite prospective vendors to demonstrate how their solution addresses your challenges. You don’t need the solution to do everything, you just need it to do what is relevant to you. Observe how easy it is for users to engage in the use cases with the system. Does a task require two clicks or 20? Does the solution present the specific data you need, or a glut of information on a dense, multi-page screen?
Next, ask for customer references from those enterprises that have deployed a CLM to solve the same problems as you. Get their direct feedback on the solution and ask the questions that matter most. How hard was it to configure the CLM system to do this particular thing? Were costs and timelines in line with the benefits? Don’t check any box without first considering insight from experienced users.
Suite Vendors and Promises: A Final Warning
Beware, most incumbent suite vendor you work with will say, “Of course our system can do what you need.” They probably aren’t lying. A few might even provide what you need to solve your unique business challenges. But most won’t. And if someone tells you they can make their system do just about anything, that’s probably true only if you’re willing to spend heavily to customize it.
Remember, you want your enterprise contract management software to add value and provide a competitive advantage, not burden your team. Given this, is the solution you’re considering built for what you need? Will you have to spend big bucks and wait months or even years for a systems integrator to configure the capabilities you require?
Far better to get something that works now for what you need today. And don’t accept a promise from a prospective CLM vendor that they’ll build in the specific features you’re asking for in their next revision.
In my experience, those promises are often left undelivered.
Debbie Wilson has delivered market-driven insights, strategic vision and expert guidance to leading enterprises around the world for more than three decades.As Gartner’s lead analyst covering procurement and CLM technologies, and later as group leader for procurement, finance and ERP, Debbie became widely recognized as one of the industry’s most respected thought leaders in procurement technology innovation, adoption best practices, vendor selection and automation strategy. Her mission is to share her knowledge, passion and experience to help enterprises identify and deploy the right CLM solutions to transform their contracting.
Additional Resources
Enterprise CLM Software: 5 Key Attributes
4 Challenges Facing Buyer-Supplier Relationships and How to Solve Them
Applying Application Administration to the Contract Lifecycle
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